We finally got the Westminster Spring Budget for 2020 with the added elements of COVID-19, a brand new chancellor and a rapidly looming new tax year!. I have summarised below what impact the budget could have on your business in the 20/21 tax year highlighting the differences for my Scottish base where relevant.

Individual tax allowances and thresholds

• Personal allowances held at £12,500 (meaning you get the same amount tax free as last year whether you are self employed or PAYE).
• The higher rate 40% tax band for England and Northern Ireland has rose to £50,000 from £45,000. In Scotland you pay 41% over £43,430 for Non dividend Non-Savings, Non-Dividend income. Additional tax of 45% (46% Scotland) kicks in at £150,000 across the UK.
• Dividend Allowances have stayed at £2,000 and dividend tax is still 7.5% for basic rate tax payers and 32.5% for higher rate taxpayers (i.e. over £50,000 for all of UK).
• National Insurance threshold for employees and the self employed increased to £9,500. Rates are the same.
• Student Loan Plan 1 repayment threshold will rise from £18,935 to £19,390 for Plan 1 loans.

So what does this mean?

• Potential tax savings due to lower National Insurance and change in higher rate threshold. Check out the BBC/ Deloitte’s budget calculator which can cope with Scottish tax rates!
• If you are a sole director of a limited company with no employees it means the recommended annual salary is £9,500 with the rest dividends (as allowed by your profits). This assumes no other income.
• If you are a director with employees or other active director(s) then the recommended annual salary stays at £12,500.

Other points for employers

• Employment Allowance has increased from £3,000 to £4,000 per year, meaning more employers will pay less employer national insurance.
• National Minimum Wage and National Living Wage have increased with over 25’s to receive at least £8.72 per hour. The Real Living Wage is currently £9.30 across the UK and £10.75 in London.
• See here for more details on thresholds and rates for employers including statutory maternity pay and statutory sick pay.
• COVID -19: Small and Medium Enterprises (SMEs) will be able to reclaim 100 percent of Statutory Sick Pay paid for 14 days per employee from the Government due to the coronavirus crisis. However, as per this guidance the eligible period for the scheme will only commence the day after the regulations on the extension of Statutory Sick Pay to self-isolators comes into force and it is not clear how employers will be repaid. This could mean cashflow issues for employers and indeed that some employers are not refunded depending on when the emergency regulations come into force. I will be monitoring this so we can provide further guidance.

Other COVID-19

There were a range of other measures announced today. Details on how these will work are understandably sketchy at the moment given the circumstances. They include:

• A dedicated helpline for COVID 19 affected businesses and self-employed individuals. The number is 0800 0159 559 to ask HMRC for bespoke “Time to Pay” arrangements in relation to your outstanding tax liabilities.
• A Business Interruption Loan Scheme to enable businesses to apply for a loan up to £1.2m.
• Rates relief for some businesses in England and a £3,000 cash grant to those businesses eligible for small business rates relief. This is a devolved area so not clear at this point whether the reliefs and grants will also occur outside of England.